A $10-million venture capital fund allowing aboriginal Canadians to tap into oil and gas revenue as equity owners will lead to more jobs and economic spinoffs, predict native leaders.
The new Indian Resource Council’s (IRC) Sectoral Capital Fund – a limited partnership bootstrapped by a $2-million contribution from the federal government – will also give First Nations the opportunity to develop their expertise in venture-capital management, says IRC president and former Blood chief Roy Fox.
“I believe this is truly another milestone for First Nations economic development,” Fox said, following the announcement by Indian Affairs and Northern Development Minister Robert Nault in Calgary.
“There are many value-added opportunities in the energy sector that First Nations have not fully exploited yet, largely due to a lack of capital and a lack of expertise.” The Indian Energy Corporation (IEC) will manage the fund, a limited partnership that includes the Federation of Saskatchewan Indian Nations, the Indian Business Corporation and the IRC, which represents 120 First Nations across Canada.
Projects from across Canada will be considered, favouring those most likely to create jobs and provide a healthy return on investment. The money will also be used to provide financing for First Nations to exercise options such as buying back interest in producing wells on reserve.
Nault estimates the fund will make a total investment of $48.5 million in the aboriginal oil and gas sector over the next decade.
One hundred businesses will benefit directly, with each enterprise negotiating an agreement that includes an investment of about $500,000. It’s expected a total of 300 projects will receive funding.
The IEC has contracted Calgary-based EnerVest, a company that specializes in creating public and private oil and gas investment funds, to provide advice and to leverage the fund by raising private capital.
“We feel strongly that this is a great opportunity to increase the participation of First Nations in the oil and gas industry – and to make money,” noted EnerVest vice-president Ward Mallabone.
Nault said the fund follows federal promises to give First Nations greater control over oil and gas resources on their own territory.
“Unfortunately, for many years, First Nations participation in the oil and gas sector has been limited to the exchange of mineral rights for permits, leases and royalty revenues. This fund is designed to turn that around,” Nault said.
He added that the federal government’s objective is to build self-sustaining aboriginal economies, rather than continually funding projects, and believes many aboriginal entrepreneurs are ready to seize the challenge.
“I can’t speak to the past, but I think what you see today is a reflection of an entrepreneurial spirit that’s existed for a long time,” he added.
Nault also announced two major First Nations economic development projects in Alberta.
The O’Chiese First Nation near Rocky Mountain House will receive $500,000 in federal funding to expand Sundown Resources, their oil and gas contracting company, into the oil pipeline construction business.
“This project is very important to our community, members and our oil- and gas-based industry,” said O’Chiese First Nation Chief Danny Bradshaw.
The Chiniki band on the Stoney First Nation west of Calgary will receive $500,000 to expand its Chiniki Village businesses, which include a restaurant, gas bar and grocery store.
“This project is a great example of how government and First Nations can work together to promote self-reliance among First Nation members and to expedite the path toward independence,” said Chief Aaron Young.
